Suppose that consumer spending is expected to decrease in the near future.If output is at potential output, which of the following policies is most appropriate according to the AS/AD model?
A)An increase in government spending
B)Aan increase in taxes
C)A reduction in government spending
D)No change in taxes or government spending

Question

Quizplus · Accepted Answer

An increase in government spending can offset the decrease in consumer spending, helping to maintain aggregate demand and keep output at potential.

Suppose That Consumer Spending Is Expected to Decrease in the near Future.If